The Essentials of Free Enterprise
By John Counsel
The information on this page is a kind of Executive Summary of the principles of free enterprise identified and explained in the rest of this site. Here, in a nutshell, are the real secrets of small business success.
1. In free enterprise there are no rewards for activity, only for results.
2. The only way to control a result is to control the process that produces it. (It's illegal to even attempt to control a result by force or deception. You can go to jail for extortion or fraud.)
3. You can't control what you can't define... because you don't know what you're talking about or dealing with if you can't define it.
4. Most people can't define a cause-and-effect relationship. They just describe its effects. (A definition explains why, a description merely explains how. Like most things in human nature, because the causes are usually hidden, we focus on the visible effects — the end result. We don't want to know why, just tell us how! We relieve the symptoms, then wonder why the disease still exists.)
5. Business is "the exchange of resources for profit"— simple cause and effect.
6. The only result in business, then, is profit! Strictly speaking, if you don't make profit, you're not in business — by definition. You're really just running a charity to benefit the tax man, your landlord, your employees, the media (for ads that don't sell) and lots of other undeserving beneficiaries you can't afford. You'll soon be broke... and out of businessl
7. The process that produces profit is the exchange of resources.
8. To facilitate the process of exchange you need to have a medium of exchange.
9. In free enterprise there are TWO mediums of exchange.
10. Our two mediums of exchange are time and money. They can be exchanged for almost anything and are freely interchangeable. "Time is money!" is the basis of all employment — and most "selfemployment” (a risky perspective).
11. Only two things count in life quantity and quality. It's pointless having one without the other.
12. When you have plenty of money (quantity) you need time to be able to enjoy it (quality). When you have all the time in the world (quantity) it's pretty miserable if you don't have enough money to live on (quality). Time and money give quality to each other. You need to have both.
13. The secret of small business success is to gain control over both mediums of exchange... your time and your money. Only then can you enjoy control of the process that produces profit.
14. The key to success is to become more productive (reduce the time involved) and more profitable (increase the money produced in that time).
15. The only activity that produces profit is to sell something for more than it costs you to buy, make or provide (any fool can sell it for less).
16. You can't make a profit simply by buying. Until you sell it (for more than it cost), all you have is more product than you need and less money than you had... and you've wasted your time and effort!
17. The process of cause and effect is always a chain reaction. Cause begets effect which begets effect which begets effect... Iike dropping a pebble in a pond. The effects ripple outward.
18. One-off sales usually produce losses, not profit! To make profit from selling, we need repeat sales (quantity) and profit able sales (quality).
19. The only way to enjoy profitable, repeat sales is to find profitable, repeat customers.
20. The only way to create profitable, repeat customers is to create satisfied customers.
21. You can't satisfy emotional wants. You can only satisfy rational needs.
22. No matter how much they need what you're selling, until they want it, your customers won't buy it!
23. Identifying a need and satisfying it is marketing.
24. Getting people to want what they need is the art of selling.
25. Selling only what people need is selling with intelligence and integrity... the only way to win profitable, repeat sales from profitable, repeat customers.
26. The process of creating — and keeping — profitable, repeat customers is relationships.
27. The process of creating relationships is defined (and described) by the Fulfilment Cycle. (This powerful model explains both why and how the process produces the desired results.)
Conclusions
Your real purpose for being in business is personal freedom... being able to choose whatever you want to do with your abundant free time because you have all the money you need to afford it.
The secret of small business success is controlling your time and money (by minimising the first — productivity — and maximising the second — profitability.)
The secret of controlling your time and money is controlling the processes involved.
The process of controlling your profitability is effective marketing.
The secret of effective marketing is customer fulfilment.
The secret of customer fulfilment is to understand (and control) relationships.
The process of controlling your productivity is effective role and resource management.
The secret of effective role and resource management is effective personal control strategies.
The secret of effective personal control strategies is definition. (You can never control what you can't define, remember?)
The secret of defining is to understand (and control) relationships.
In other words, the real secret of small business success is your ability to define and control relationsbips — of all kinds.
Why relationships are essential
To win control of our time and money we need to understand and control relationships — for one very simple, sound reason:
Time and money are just mediums of exchange.
The only way we can increase our own time and money is by having other people give us some of theirs. We can't just take them from others by force or deception, either... it's illegal to even try!
We have to persuade others to give them to us (in exchange for something of value to them.) That's why time and money are called "mediums of exchange."
And that's why we need to be able to understand and control our relationships with other people (and things, ideas, events, activities, etc.)
But, as pointed out earlier, the normal human reaction is to focus on the end result — the final effect— rather than the original cause that produces it.
This explains why most training about profit is really about processing profit (bookkeeping, computing, tax, banking, etc.), polishing profit (cost control, efficiency, budgeting, etc.) or protecting profit (insurance, legal aspects, superannuation, workers' compensation, etc.) — but rarely about actually producing profit!
In fact, most attempts at teaching marketing to small business are either rehashes of dry, mechanical BIG business processes (that give little or no idea of why you need to do them), or are presented by highly qualified marketing professionals from BIG business — where the whole emphasis nowadays is on "relational marketing" — trying to synthesise what small business has always had in living flesh and blood by using data processing and telecommunications technology! (But still with the wasteful, broadbrush style typical of big business marketing.)
It also explains why most training about time focuses on "time management" (about as rational as “weather management", "tide management” or "earthquake management"), with half the time devoted to relieving the effects — like procrastination and “time wasters". It's hardly ever about gaining more time through effective management of your roles and resources — only one of which is time (and the irony is, of all your resources, it's the only one you CAN’Tmanage.)
Big business has very little to teach small business when it comes to marketing, but only when small business knows what it's doing! When small business gets its marketing right, big business can't compete.
The problem for small business lies in getting it right. If big business can't teach us, where do we find out what works and what doesn't?
One thing's for sure... you won't learn it from desk-bound bureaucrats or failed small business operators who can't cut it in the real world of free enterprise.
Similarly, when it comes to productivity, bureaucrats have little to offer except platitudes. After all, the prevailing wisdom in any bureaucracy is "there are no rewards for results, only for activity." (Results are too threatening for the mediocre majority. It makes them look bad. It's much safer — and easier — to justify their existence by looking busy, and protecting their positions by empirebuilding... controlling everyone else.)
Because small business owner-managers are usually in direct contact with their customers, they enjoy an unbeatable advantage over big business when it comes to market research, customer satisfaction and fulfilment. For this reason, a very different approach is required, which is why marketing ideas developed for big business have very limited relevance to small business.
Taken from
“Don’t Go Into Small Business
Until You Read This Book!”
by John Counsel
Small Business Books 1996
© 1996, 1997 by John Counsel
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